Chapter 3 - Demand analysis and optimal pricing. In chapter 2, we presented a simple model of profit maximization. There the manager began with demand and cost functions and used them to determine the profit-maximizing price and output level for a given product or service. In this chapter, we will take a closer look at demand and the role it plays in managerial decision making. | Chapter Three Demand Analysis and Optimal Pricing There’s no brand loyalty so strong that the offer of “penny off” can’t overcome it. ~A Marketing Aphorism For Discussion Airline Ticket Pricing Anyone who has traveled via commercial airline, even on an infrequent basis, knows there is a bewildering plethora of fares for the same route. Determinants of Demand The Demand Function The Demand Curve and Shifting Demand General Determinants of Demand Figure A Shift in Demand Elasticity of Demand Price Elasticity Factors Affecting Price Elasticity Other Elasticities Cross-Price Elasticities Price Elasticity and Prediction Figure extreme cases Demand analysis and Optimal Pricing Price Elasticity, Revenue, and Marginal Revenue Maximizing Revenue Figure Demand, Revenue, and Marginal Revenue Demand analysis and Optimal Pricing Optimal Markup Pricing Business Behavior—Pricing in Practice Demand analysis and Optimal Pricing Price Discrimination Multinational Production and Pricing . | Chapter Three Demand Analysis and Optimal Pricing There’s no brand loyalty so strong that the offer of “penny off” can’t overcome it. ~A Marketing Aphorism For Discussion Airline Ticket Pricing Anyone who has traveled via commercial airline, even on an infrequent basis, knows there is a bewildering plethora of fares for the same route. Determinants of Demand The Demand Function The Demand Curve and Shifting Demand General Determinants of Demand Figure A Shift in Demand Elasticity of Demand Price Elasticity Factors Affecting Price Elasticity Other Elasticities Cross-Price Elasticities Price Elasticity and Prediction Figure extreme cases Demand analysis and Optimal Pricing Price Elasticity, Revenue, and Marginal Revenue Maximizing Revenue Figure Demand, Revenue, and Marginal Revenue Demand analysis and Optimal Pricing Optimal Markup Pricing Business Behavior—Pricing in Practice Demand analysis and Optimal Pricing Price Discrimination Multinational Production and Pricing Revisited Demand-Based Pricing Forms of Price Discrimination Information Goods Customized Pricing and Products The Economics of Groupon Airline Ticket Pricing Revisited Appendix to chapter 3 Consumer Preferences and Demand The Consumer’s Problem Indifference Curves The Budget Constraint Optimal Consumption Demand Curves Figure A Consumer’s Indifference Curves Figure The Consumer’s Budget Line Figure The Consumer’s Optimal consumption Bundle Figure The Price-Consumption .
